Walters' insider trading defense hinges on U.S. government witness: lawyer

(Reuters) - The lawyer defending Las Vegas sports gambler William "Billy" Walters against insider trading charges said the U.S. government's key witness, former Dean Foods Co Chairman Tom Davis, turned on his client to win a sweetheart deal for himself.

"The only thing Billy Walters is guilty of is being friends with and trusting Tom Davis," lawyer Barry Berke said in his opening argument to jurors in a trial in federal court in Manhattan

Prosecutors say Davis passed confidential information about Dean Foods to Walters, allowing him to make more than $40 million in profits and avoided losses between 2008 and 2014.

Assistant U.S. Attorney Michael Ferrara kicked off the trial with his own opening statement laying out the charges against Walters. He said phone and trading records would show that Walters often traded in Dean Foods stock after speaking to Davis, sometimes within minutes.

Ferrara also told the jury that Davis will testify about how he used a prepaid "burner" phone to pass on tips to Walters, using "Dallas Cowboys" as code for Dean Foods and eventually throwing the phone in a creek.

In return for the tips, Walters made personal loans to Davis of almost $1 million, Ferrara said.

"Walters broke the law again and again by placing his own greed ahead of the laws designed to make the stock market fair," he said.

Berke told jurors that Davis, facing charges that he engaged in insider trading, stole from a charity he ran and committed tax fraud, repeatedly changed his story to prosecutors in an effort to win a plea deal.

Berke promised to show that Davis' testimony was made up of "lies," and said the story of the burner phone was entirely invented.

Walters, 70, was arrested in May 2016 in Las Vegas on charges of securities and wire fraud.

In addition to the charges about Dean Foods, Walters is also accused of making $1 million trading on a tip about Darden Restaurants Inc.

Prosecutors also say Walters passed insider information to star golfer Phil Mickelson, who agreed to pay back more than $1 million that the U.S. Securities and Exchange Commission said he earned trading Dean Foods shares.

It is not clear whether Mickelson will testify, though potential jurors were asked about their views of him.

The case is U.S. v. Davis et al, U.S. District Court, Southern District of New York, No. 16-cr-00338.